China’s equity market provided welcome relief for the country’s
insurance industry in the first quarter of 2009, with the benchmark
Shanghai Composite Index rising 28 percent, compared with a 34
percent decline recorded in the first quarter of 2008.

The market’s recovery powered a significant improvement in the
industry’s total investment income which rose 41 percent compared
with the first quarter of 2008 to CNY43.3 billion ($6.3 billion),
according to the China Insurance Regulatory Commission.

Boosted by the stronger equity market, China Life, the country’s
largest life insurer, reported a CNY841 million investment gain in
the first quarter of 2009, a major improvement on the CNY5.5
billion investment loss in the first quarter of 2008. This helped
the insurer lift net profit by 55.3 percent, from CNY3.47 billion
in the first quarter of 2008 to CNY5.39 billion.

Far less impressive was China Life’s premium income performance
which reflected a 1.8 percent increase compared with the first
quarter of 2008 to CNY104 billion. The increase was a fraction of
the 50.4 percent rise recorded by the company in the 12 months to
December 2008. Overall, industry premium income growth in the first
quarter of 2009 outpaced China Life’s performance, rising 9.4
percent to CNY255.8 billion. This left China Life with a market
share of 40.7 percent, down from 44.4 percent in 2008 as a whole
and continuing the declining trend evident for many years.

Gaining ground on China Life in the first quarter of 2009 Ping An,
the country’s second largest life insurer, recorded a hefty 37.2
percent increase in premium income to CNY49.02 billion leaving the
insurer with a market share of 19.2 percent.

However, Ping An’s net profit fared poorly, declining by 71.3
percent compared with the first quarter of 2008 to CNY2.07 billion.
Ping An did not reveal the reason for its profit decline.

Fairing poorly in terms of premium income and profit China’s
third-ranking life insurer China Pacific Insurance Group saw
premium income slip 4.6 percent compared with the first quarter of
2008 to CNY29.2 billion while net income slumped 89 percent to
CNY200 million. The insurer revealed it wrote-off CNY151 million
against its equity holdings in the first quarter of 2009.

Amongst foreign life insurers operating in China, Generali is
holding firmly onto its leading position achieved in 2008 via its
joint venture with China National Petroleum Corporation, Generali
China Life (GCL).

The Italian insurer reported in the first two months of 2009 GCL
generated premium income of €155 million ($206 million), up 122.5
percent compared with the corresponding period in 2008. According
to Generali this gave CGL a market share of 21.2 percent among
foreign life insurance players.

Second position amongst foreign life insurers in 2008 was taken by
Aviva-Cofco Life Insurance, a joint venture between UK insurer
Aviva and Chinese food manufacturer Cofco.

Aviva reported that Aviva-Cofco generated total premium income of
£296 million ($435 million) in 2008, an increase of 40 percent in
local currency terms.

Notably, as recently as 2007 US insurer American International
Group (AIG) was dominant amongst foreign insurers in China.

In that year, AIG’s market share amongst foreign insurers stood at
22.5 percent, then almost three times higher than its nearest
rivals, Aviva-Cofco which ranked second and GCL which ranked